I initially posted this in another forum, but I think it's relevant here, so I'm posting it with some extra notes/thoughts:
My initial reaction to "1024x768 resolution" was actually a bit negative, but that's because we associate that resolution with "non-widescreen" XGA monitors. We assume that *x768, in the widescreen/HD world, means that it has to have a 1280/1360/1366 in front of it (1280x720, 1280x768, 1280x800, 1360x768, and 1366x768 all being variations of WXGA).
But, I don't think Apple's mindset here was "we're going to give them the non-HD version of *x768 displays". This isn't them attempting to give us an SD XGA screen.
The standard widescreen resolution for devices this size (netbooks and other tablets) is: 1024x600 (WSVGA). That's the widescreen/HD version of 800x600 (SVGA).
I think Apple's mindset is "we're giving them the same 1024x600 everyone else gives them, plus 25% more pixels". Certainly, the iPad will display everything that a 1024x600 tablet/netbook will display. Plus a little more. In portrait mode, you can display wider images/web-pages/etc. In landscape mode, you can have a WSVGA based app, image, movie, or webpage open, and still have room at the bottom for a control panel. It's just as good as having a 1024x600 display, like every other mid-size tablet or netbook ... plus a little more.
(also note that if you quadruple an iPhone's display, so that each iPhone pixel is 2x2 pixels, perhaps with anti-aliasing, then you get 960x640 ... that's too tall to display on 1024x600, so they couldn't really go with WSVGA ... in order to "run standard iPhone apps in 4x size", they had to do more than 1024x600)
It's still disappointing that they didn't go with a WXVGA and/or 720p format, but I don't think this is a case of "we're giving you an SD screen", I think it's a case of "we're giving you the standard HD/widescreen everyone else is giving you, plus 25% more". Still, that said, they should have gone with WXVGA. The only reason not to is "would it have made the device prohibitively expensive?" (more than $600 for the base non-3G unit)
Unfortunately, that's probably doomed to be a PR nightmare. Everyone will associate this with SD XGA displays, and say the resolution is so "6-10 years out of date". To some extent they're right ... I just suspect that Apple was trying to do something better than the netbook competition, not lagging behind the 720p/WXVGA world (which is not very widely embraced, if embraced at all, in the mid-size netbook/tablet market).